DayCents

Tax Bracket

A tax bracket is an income range taxed at a specific rate. The U.S. system is progressive, so moving into a higher bracket only taxes the income above that threshold at the higher rate — not your entire income. That's why a raise never leaves you with less take-home pay.

The bracket your top dollar falls into is your marginal rate; the average across all your income is your effective rate, which is always lower. Understanding this prevents the common myth that earning more can push your whole paycheck into a higher tax.